Dow's drop breaks a "too quiet" spell

“It’s Quiet…. Too Quiet,” an article in The Wall Street Journal warned Tuesday morning, noting that it had been 45 trading days since the last 100-point drop on the Dow Jones Industrial Average.

The Chicago Board Options Exchange’s VIX, or volatility index, which often predicts when wild swings on the market will occur, was at its lowest point in six months.

And then, as if on cue, the Dow plunged more than 200 points, with similarly sharp declines on the broader Standard & Poor's 500 index and the tech-dominated Nasdaq index.

The VIX shot back up by more than 15 percent as Tuesday’s trading was getting under way, suggesting a bumpier ride over the next few weeks.

So what does it all mean? Following are the views of several local analysts:

The permanence of change. “Nothing stays the same forever. And that means volatility is going to be around forever,” said Brent Wilsey, head of Wilsey Asset Management in San Diego. “Since stock market futures are up, this could be a quick one-time pullback with things going back up tomorrow. Or it could be the start of something a little longer, maybe lasting a week or a month. Things have risen pretty steadily from Jan. 1 through March 5, but they don’t go up every single day.”

It's all Greek. Allan Timmerman, who teaches about the markets at the University of California at San Diego, said the immediate cause for the market’s downfall was a hiccup in the negotiations over Greece’s debts, which also pushed foreign stock markets lower.

“Markets tend to move on certain themes,” he said. “We all know that the problems in Greece are going to linger for a while, just like we know the problems with the U.S. debt and deficit will linger for a while. But every so often, they come back into the headlines in ways that make the markets react.”

Time to reap the profits. Bud Leedom, publisher of the California Stock Report, suggested that the dip was probably more related to major players in the stock markets deciding to cash in some of their holdings and reap the profits.

“With the Dow briefly hitting 13,000, the S&P 500 going above 1,300 and the Nasdaq sniffing around at 3,000, those are pretty significant milestones to hit after a really big run,” Leedom said. “I think that really increased the desire to take some profits.”

"Garden variety" correction - and complacency. Matt Pavich, vice president of investments at Presidential Brokerage Inc., similarly suggested that Tuesday's dropoff could be "a garden variety correction" of between 3 percent and 7 percent, after a strong run on the market.

"The problem is that too many people are saying the same thing," he added.

Pavich worries that after a long upward run on the market, investors may be getting too complacent. He said that despite continuing signs of growth in the United States, problems in Greece and slowdowns in emerging markets continue to hint that the global economy is not out of the woods and that a return to recession is not unthinkable, so it's still good to maintain some caution.